Dioceses to Underwrite Own Liability Premiums

Twelve Roman Catholic dioceses representing 1,000 churches in California, Nevada and Arizona have formed their own liability insurance company called the Ordinary Mutual.

It’s an effort to reduce liability premiums, which in some cases have doubled in the past year for churches. Other types of insurance--fire, theft and property damage--will be bought from private insurers.

“Churches tend to have a large volume of small claims, such as people slipping on rice after weddings,” said Bruce Egnew, director of finance for the Archdiocese of San Francisco and president of the new company.

In the past decade, Catholic dioceses have paid out nine times as much in liability premiums as they have received in claims, said Brother Haig Charshaf, business manager of the Oakland diocese. He said the high cost has forced some dioceses to reduce coverage to $1 million, which “just isn’t enough.”

Blames Costs on Others

Egnew blamed others for the churches’ insurance woes, contending that rates are rising because of “transportation industry catastrophes, environmental pollution, product warranty claims and other multimillion-dollar losses not characteristic of the common slip-and-fall type of claims” at churches.

Egnew said liability costs for the San Francisco archdiocese are about $1 million this year, up 60% from 1986. The year before, the cost rose 40%.

The church company will cover dioceses in Los Angeles, San Francisco, Orange, Oakland, Stockton, San Jose, Santa Rosa, Monterey, Fresno, Reno/Las Vegas and Tucson. Egnew said the company will write comprehensive general liability for about 980 parishes, 615 schools and other operations including seminaries, cemeteries, social service and youth agencies and diocesan headquarters.

Although Charshaf said the new insurance firm is the first of its kind for the U.S. Catholic church, it is not unusual in the corporate world.

Following Fortune 500

“Many, if not all, of the Fortune 500 companies have gone to self-insurance,” Charshaf said.

Premiums are expected to be reduced significantly in the next few years. They will be based primarily on a diocese’s losses over the past five years.